Hidenburg report: Congress demands SEBI, RBI probe into Adani Group

The close relationship between Adani Group and PM Modi was questioned by Congress

ITDC INDIA EPRESS/ ITDC NEWS The Congress on Friday demanded a detailed investigation by the SEBI and RBI into charges of alleged financial irregularities against the Adani Group. According to Congress general secretary, communications Jairam Ramesh said that the analysis by the Hidenburg research requires serious investigation by Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI).

They are responsible for ensuring stability and security of the country's financial system, he added.

"We fully understand the close relationship between the Adani Group and the current government. But it is incumbent on the Congress party as a responsible opposition party to urge SEBI and RBI to play their roles as stewards of the financial system and to investigate these allegations in the wider public interest," Ramesh said in a statement.

Hindenburg Research has alleged that Adani Group was "engaged in a brazen stock manipulation and accounting fraud". However, Adani Group has refuted the allegations and described the attacks against them as malicious, unsubstantiated, one-sided, and with the intention to ruin its share-sale.

Hindenburg, a US-based investment research firm that specialises in activist short-selling, said its two-year investigation reveals that "the Rs 17.8 trillion (USD 218 billion) Indian conglomerate Adani Group has engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades," reported PTI.

Ramesh said that the Modi Government can try and impose censorship, "But in an era of globalisation of Indian businesses and financial markets can Hindenburg-type reports that focus on corporate 'misgovernance' be simply brushed aside and dismissed as being 'malicious'?"

He also added that the evolution and modernisation of India's financial markets since the 1991 reforms has aimed to improve transparency and to a level playing field for domestic and foreign investors.

"For all its posturing about black money, has the Modi government chosen to turn a blind eye towards illicit activities by its favourite business group? Is there a quid pro quo? Will SEBI investigate these allegations to the fullest and not just in name?" he asked.

Ramesh also pointed out that the Modi government may have exposed India's financial system to systemic risks through the liberal investments in the Adani Group made by strategic state entities like LIC, SBI and other public sector banks is the worst situation.

"As much as 8 percent of LIC's equity assets under management, amounting to a gigantic sum of Rs 74,000 crore, are in Adani companies and comprise its second-largest holding," he said.

“If, as alleged, the Adani Group has artificially inflated the value of its stock through manipulation, and then raised funds by pledging those shares, banks such as SBI could face heavy losses in the event of a fall in those share prices," he said.

The Congress general secretary said normally a political party should not be reacting to a research report on an individual company or business group prepared by a hedge fund, but the forensic analysis by Hindenburg Research on the Adani group demands a response from the Congress party.

"This is because the Adani Group is no ordinary conglomerate: it is closely identified with Prime Minister Narendra Modi since the time he was chief minister," Ramesh said.